Nice idea! I notice that this is one-level more general than Nuño's idea of paying for the initial liquidity of a personal AMM that you hand to a forecaster to profit from.
If you gave out multiple accuracy agreements, say to the first and second-place bidders (which both pay the second place bidder's price), then those parties would have good incentives to work together, sharing information and analysis. This incentive to cooperate is one way that an accuracy agreement could be a better structure than a prediction market.
Also, for forecasts that require a lot of upfront research, it can be more efficient to have only one or a couple parties pay the research cost. With a prediction market, you would need to collude with other parties so that only a max number do the costly research, which is a hard coordination problem. (Actually, according to your example, bidders submit their forecasts with the bid. Seems like because of research and analysis costs they should only submit forecasts after winning the bid?)
Thirdly, I really like the generic nature of having any computable scoring. I feel like there must be some powerful use cases here. If the purchaser trusts the client's judgment, the purchaser could submit qualitative predictions (e.g. prose) and the client could later give a score for how well they did.
An unsolved problem for prediction markets with an AMM is news traders taking more profit relative to effort expended. This accuracy agreement doesn't solve this problem. If a decisive event happens early that could earn them a lot of money, then they could rest and vest. In fact, because of the potential for profit, there could be some incentive for them to act to cause certain outcomes. (Just like with prediction markets!)
The legality problems are interesting, but you might also fare better than prediction markets. It doesn't fit into a known illegal category (AFAIK), and seems more likely to succeed at the argument that it's a game of skill. There also wouldn't be much legal risk until the agreements get much larger.
Nice idea! I notice that this is one-level more general than Nuño's idea of paying for the initial liquidity of a personal AMM that you hand to a forecaster to profit from.
If you gave out multiple accuracy agreements, say to the first and second-place bidders (which both pay the second place bidder's price), then those parties would have good incentives to work together, sharing information and analysis. This incentive to cooperate is one way that an accuracy agreement could be a better structure than a prediction market.
Also, for forecasts that require a lot of upfront research, it can be more efficient to have only one or a couple parties pay the research cost. With a prediction market, you would need to collude with other parties so that only a max number do the costly research, which is a hard coordination problem. (Actually, according to your example, bidders submit their forecasts with the bid. Seems like because of research and analysis costs they should only submit forecasts after winning the bid?)
Thirdly, I really like the generic nature of having any computable scoring. I feel like there must be some powerful use cases here. If the purchaser trusts the client's judgment, the purchaser could submit qualitative predictions (e.g. prose) and the client could later give a score for how well they did.
An unsolved problem for prediction markets with an AMM is news traders taking more profit relative to effort expended. This accuracy agreement doesn't solve this problem. If a decisive event happens early that could earn them a lot of money, then they could rest and vest. In fact, because of the potential for profit, there could be some incentive for them to act to cause certain outcomes. (Just like with prediction markets!)
The legality problems are interesting, but you might also fare better than prediction markets. It doesn't fit into a known illegal category (AFAIK), and seems more likely to succeed at the argument that it's a game of skill. There also wouldn't be much legal risk until the agreements get much larger.
Cheers,
James